Ross Mayfield: ROI

Resistance is Futile

Fri, 25 Jul 2003 22:52:06 GMT

Liz Lawley made a great post on in-class and in-conference back-channels over at Many-to-Many.

A key takeaway is that the back-channel will always exist. You can resist or incorporate it into your activities to focus the channel.

The Other Buzz

Fri, 25 Jul 2003 22:44:52 GMT

Buzz narrowly escapes his 15 minutes of fame. Today's NY Times story on back channels at conferences has provoked lots of interesting commentary around the web today. One tidbit to pass along. The story includes the archetypal conference blogging story of the impact of Doc Searls and Dan Gillmor sharing a link from Both "forwarded by a reader in Florida." If you want the story behind the story, go check out Buzz Bruggeman's blog buzzmodo. Buzz was that "reader in Florida" and he describes his near 15 minutes of fame. [via McGee's Musings]

Im posting this to help Buzz get a little more fame, as he deserves. The role of a remote participant has grown because of his role.

With all the attention on heckling, good to note remote participation can also be a positive contributor to an event. Arguably in a position to provide greater focus, they can cull revelvant resources and affirm points made by a speaker.

Trade Winds

Tue, 22 Jul 2003 18:51:45 GMT

The community that was fostered at AO2003 is now providing more pensive analysis. This is a great time to reflect on how social software is changing the events business and the "trades" in general.

An excerpt from Conferenza, which provides a tad more traditional paid research coverage of trade shows, contains this golden nugget of controversy:

Still, there were interesting insights, some intended and some not...

· As a demonstration of the power of interconnection, a panel on Web services featuring Salesforce.com CEO Mark Benioff provoked the most talked-about moment of the conference – at Benioff’s expense. Asserting that the largest e-commerce software supplier is Amazon.com, Benioff pointed toward co-panelists from IBM and Sun Microsystems and said, “None of these companies has any position in [that] market at all. Even Apple’s iTunes music store was built on Amazon,” and asserted that Amazon has 300 people working on its proprietary software.

We thought this was news, until Ross Mayfield, CEO of one of the Web’s leading blogging software providers, Socialtext, led an online chat charge showing that most of this was apparently untrue: Amazon uses standard XML out-of-the-box stuff, and Apple’s iTunes doesn’t use Amazon’s software at all, the chatters charged. As Benioff continued, the audience watched as a group of online contributors disputed fact after fact, input Benioff apparently did not see. “It was sort of like a ‘Saturday Night Live’ skit,” said one attendee. “As Mark spoke, we could see his nose growing longer, like Pinocchio.”

How it played out in the Chat (Archive) was Kevin Marks did the fact checking, which was simultaneously projected on to the big screen:

[11:51] KevinMarks: no he didn't
[11:51] adina: bthey /are/ mentioning public web serivces
[11:51] KevinMarks: he licensed the patent
[11:51] KevinMarks: iTunes backend is not Amazon
[11:51] toughcrowd: this panel is showing lots of promise - but I love that cynical suspicion "lovefest"
[11:51] Ross: Amazon's real smart move was an API for developers
[11:52] adina: tross
[11:52] Ross: but they dont get decentralization. witness http://www.allconsuming.com
[11:52] adina: ross again
[11:52] Ross: Kevin, did he say it was?
[11:52] KevinMarks: Apple had ahuge online store already selling Macs
[11:52] KevinMarks: they built on that for iTunes
[11:53] Ross: real-time fact checking Kevin, I love it
[11:54] DariusD: Do you know that the Apple onnline store was not built on Amazon technology?
[11:54] KevinMarks: It is built on Webobjects

Here's Apple's story of how iTunes was built and how they licensed the one-click form from Amazon. Before we get carried away with the event of a fact check, rather than dynamic itself, its important to understand the context. I doubt Marc had negative intent, he had little to gain if so, and he was just plain conversing.

This parallel channel, a second superpower on a finite scale, first emerged at PC Forum 2002 when Dan Gillmor blogged a fact check on Joe Nacchio. Clay fostered the first experiments with social software as an in-room chat tool. Supernova I was the first to formalize a group weblog. PC Forum 2003 was the first to incorporate a conference wiki. The O'Rielly Emerging Technology conference renewed interest in IRC and Hydra in parallel to the wiki. Supernova II was the first to incorporate chat and wiki. AlwaysOn was the first to add video streaming (Archive), creating a richer remote participation experience.

For some, the choice of modes is overwhelming at first, something we are tuning. But Social Software and its practices for events has a reached a level of maturity where it is solving fundamental tensions of event structure.

Take Bob Frankston's experience with remote participation after in-person attendance the first day:

While it's not the same as being their in person, I was surprised how well the combination of the video and Wiki worked. Over my standard home Internet connection I had very good audio and video quality in looking at the panel.

I don't know how to capture the screen picture that included the video so I simply used my digital camera to take a picture. That's Tony Perkins summing up the conference discussion log is in the lower left. There was a lively discussion with people in the room and others outside such as Joi Itcho in Japan and me at home. Joi mentioned that he was attending in his underwear and people wanted to get a video of him. He obliged though only above the waist...

...I judge events by the attendees more than by the panelists and, by that measure, the event has gotten off to a good start. The concept of being always-on or always connected is a good one though, in my opinion, it is important to distinguish between the transport issues that enable connectivity and the question of what one does with connectivity and the implications. This confusion is reflected in some of the panels.

As I write this I'm still attending remotely. I can view the conference over the Internet with very good audio and video quality. Socialtext is provided a live commenting facility using their Wiki software. This is wonderful for those like me who want to jump up and say "that's stupid" or maybe even be positive. There were problems with 802.11 connectivity the first day so I had only a few opportunities for such commentary though I did make good use of it. Today, from home, it appears to be working better and I've been able to add my own comments on the side.

Participating from afar is interesting. The audio/video works very well but I miss the ability to kibitz with others. A side-chat facility would help. Still, this is my first time trying such remote participation. Having been there for the first day I have some sense of the context and it works very well. Of course this is early stage and I can think of a lot of improvements but it is mundanely useful rather than being a novelty.

David Weinberger recently wrote a great piece in Darwin on the Death of Panels:

...Panelists and audiences do not share the same goals. Audiences want to learn and be entertained. Panelists want to impress and sometimes want to sell. Conversations work against the panelists' natural inclination to manage their speech; conversations develop their own gravitational fields that fling panelists together in ways they can't control.

If you're organizing a conference, as an audience member I implore you to cast aside the spurious safety of panels. If you're a moderator, you'll do everyone a favor if you rearrange the chairs, eliminate the opening statements, confiscate the bulb in the projector and get your participants to just talk. Don't "leave time" for audience participation; open it up from the beginning. Hell, screw the bulb back in and project the online chat where the real life of the conference is probably happening anyway...

Mike from Techdirt yearns for conferences with semi-structured small group interaction.

...An ideal conference, then, would be more like a day full of these lunches - that forced people to think in different ways. Thus, I'd love to see a conference where people are either randomly (or carefully planned by the organizers) split into small groups, and given a task or a challenge. Let them do some scenario planning that forces them to think creatively. Get people thinking, get them involved with the ideas, get them interacting with others and force them to think outside of their own viewpoint. Maybe challenge them. Have different groups "competing" in some way to get people to really pay attention, and really try to get their minds around very difficult issues. ..

Trade Winds

Social Software and Social Networking Models provide the greatest threat and opportunity for the trade industry (trade magazines & shows) -- because they change the notion of audience into participants. The rise of weblogs and participatory media allow domain experts to contribute without making contribution their full time job. Networking models allow people to connect regardless of space or time as is the case with LinkedIn, or in space and time with Meetup. Because these tools work so well in virtuality, it is natural for them to be extended to reality (whatever that means).

Trade shows will fundamentally change their structure to become more participatory -- and the result is more connective, constructive and conversational. Remote and in-room participants will moderate panels, there will be greater use of working groups and communities will persist between events. We used to come to trade shows for the people in the place. As Dr. Weinberger says in Small Pieces Loosely Joined, the web is a set of places itself. Now we have places upon places, where the network is the conversation.

This isn't the place for me to talk about commercial value for event organizers, but let me say this. There is no such thing as a closed system. Bloggers are coming to your conference. You can't throw up Walls. The energy can dissipate or enjoin with the event. Do what Tony did and give out blogger passes. Augment experiences. Create a greater and more open context for your event and the wind will blow at your back.

Socialtext Raises Angel Round

Mon, 23 Jun 2003 14:10:56 GMT

Great news. Socialtext closed an Angel round of funding with some really great people, including:

Reid Hoffman, CEO of LinkedIn and former EVP of Paypal
Joi Ito, Venture Capitalist with Neoteny
Mark Pincus, former co-founder, CEO and Chairman of SupportSoft
Erik Josowitz, former VP of Product Strategy of Vignette
Oakstone Ventures
Freedom Technology Ventures

This new funding provides resources to accelerate the development of enterprise social software, improve how we serve our customers, and give customers greater confidence that we will be there for them.

But it's more than that -- it's a network of exceptional people. A little while back, Pete, Adina, Ed and I talked about who we wanted to work with and who we thought "got it." Raising money these days is a challenge, and it says a great deal that were able to do so with the people we wanted. I don't think we could have picked a better group. Here's what Ed Niehaus, general partner of Freedom Technology Ventures LLC said:

"We're proud to back Socialtext's experienced founding team. The company's customers tell us that Socialtext made it simple for them to discover this new flexible communication form, the Wiki, and use it to create, discuss and decide. Such early customer satisfaction is rare for a new business medium, and it makes us confident that the company will have an impact."

Since the end of last year we have accomplished a great deal with relatively few resources. We developed a tremendous advisory board and I must credit Clay, David, Doc, Jerry, Kevin, Mitch, Ward & Zack with keeping us on the wiser track. We now have over 20 enthusiastic customers. Our product is moving beyond being the the first of its kind to one that has had real success advancing teams.

So what's to come? We have a new release of our product soon, but let's not get ahead of ourselves. Mostly its continuing to spend time with customers and focusing on their needs. It sounds a little cliche, but that's what its really all about. Great products develop in social context.

Communication and Collaboration Convergence

Tue, 17 Jun 2003 20:54:45 GMT

Uh oh, there's that word again. Convergence. The solution to all our problems.

Siemens has released OpenScape, which integrates phone, voice mail, e-mail, text messaging, calendaring, instant messaging, and conferencing services. Its all centered on IM to synchronize use of different modes of communication, with a SIP server (Session Initiation Protocol) for telephony integration. OpenScape 1.0, however, requires Microsoft's forthcoming Windows Server 2003 and Greenwich collaboration server. Its the latest in a long line of communication and collaboration solutions to leverage Outlook as a platform. And its estimated to cost as much as $400 per seat.

This may just be unified messaging redux, but Mike from Techdirt is right that it has potential as a productivity tool if its simple enough for people to use. People use many modes of communication. Optimize only a one or two and you may make communication in its entirety even more sub-optimal.

With the falling cost of more traditional communcations (original videoconference sessions were $100k a pop), putting users in the driver seat is not a bad thing. Problem is this approach of deep integration creates greater costs and risks.

Corporate IM is a good center for user management of complexity, but who knows if they have gotten this right. If as advertised, its designed to fit within workflow, it may be on the wrong track. Communication is not a process, its an informal practice whose patterns cannot be pre-defined.

MySQL Nabs Venture Capital

Wed, 04 Jun 2003 20:14:00 GMT

MySQL AB, the open source database software provider, gained a $20M investment from Benchmark Capital. MySQL is often used as a primary example of how open source can be a component of a real business model. May be a harbringer of things to come, but their case is unique in that the core product is a commodity and they have achieved massive penetration.

Had a chance to meet their CEO, Mårten Mickos, at PC Forum. Terribly nice guy, wish the best for him.

Paying for Software

Mon, 26 May 2003 15:00:54 GMT

Dave expands upon his rationale for paying for software: "If you pay nothing for software, you probably won't die from it, but you may lose data, you're virtually certain to waste time, and at some point, money."

I had to learn to pay for software. Not the hard way, mind you. Growing up in Palo Alto distorted my propensity to pay. My first exposure to software was when user groups were rampant. 3 1/2 floppies were circulated as the norm at user group meetings. Social networks were the source of service. The hardware was damn expensive and it seemed natural that software sharing was the exercise.

Some of my elementary school friends had parents who were Apple developers. They had the best stuff. We hacked together games in BASIC on Apple IIs, traded in the computer lab at middle school and the worst punishment concievable was a flying eraser from the teacher (Mr. Spinoli's favorite pastime was flinging blackboard erasers at students in good fun and occasional accident).

I still hesitate to purchase packaged software and instead often simply go without. Maybe its all the times I purchased software only to become rapidly obsolete by new generations of hardware that purposely obfuscated backward compatibility. Or when I bought tools that ended up not being suitable for the job. Where I really hesitate is upgrading my operating system; feels like donating bottles of Thunderbird to a wino instead of buying them a happy meal.

But all that changed when I could buy software online. Not because it plays into impulse purchase proclivity. The ability to trial software or have a lite version with an easy upgrade path reduced my risk and led me to greater purchases.

Now I have turned on the spigot. Not because I work in the software industry, like paying for the right for customer support or have some enlightened consumer guilt. Because I can buy software as service. There is a confidence instilled from software that changes over time. Bugs get addressed, demands are met and risk is reduced. I don't care where my data lives, so long as it works for me. Better yet, when the software comes with information services it becomes alive.

I buy software when I know it will get better, rather than worse, over time. Appreciate appreciation. But that's just one consumer's take.

The Matter of IT

Tue, 20 May 2003 06:38:47 GMT

As the technology industry emerges from the bottom, it criticism has been lowered to the nature of being. Information Technology has always been a source of competitive advantage. At the bottom of the business cycle, advantage is basic survival, risk taken only on low hanging fruit. But now, as the leaky pipes have stopped dripping, some wish to relegate the job of IT to that of a plumber.

Friday's article in the NY Times by Steve Lohr asks the question, "Has Technology Lost its Special Status?" Technology as an industry is 10 percent of the economy and 60 percent of business spending. According to John Gantz of IDC, technology spending has increased 2-3 times the rate of economic growth since the 1960s. The question is if the industry will return to its historical growth rates, the driver of valuation multiples. Lohr reports:

That assumption about technology's special role is questioned in a provocative article this month in The Harvard Business Review, titled "IT Doesn't Matter." The article asserts that information technology, or I.T. for short, is inevitably headed in the same direction as the railroads, the telegraph, electricity and the internal combustion engine — becoming, in economic terms, just ordinary factors of production, or "commodity inputs."

"From a strategic standpoint, they became invisible; they no longer mattered," Nicholas G. Carr, editor at large of The Harvard Business Review, wrote in the article. "That is exactly what is happening to information technology today."

John Hagel and John Seely Brown believe this is an important article because it very effectively captures the backlash sweeping through executive suites against IT spending...But Carr’s article is also dangerous because it endorses the growing view that IT offers only limited potential for strategic differentiation....and are preparing a rebuttal in the July issue of HBR:

Extracting business value from IT requires innovations in business practices. In many respects, we believe Carr attacks a red herring – few people would argue that IT alone provides any significant business value or strategic advantage.
The economic impact from IT comes from incremental innovations, rather than "big bang" initiatives. A process of rapid incrementalism enhances learning potential and creates opportunities for further innovations.
The strategic impact of IT investment comes from the cumulative effect of sustained initiatives to innovate business practices in the near-term. The strategic differentiation emerges over time, based less on any one specific innovation in business practice and much more on the capability to continuously innovate around the evolving capabilities of IT.

Some tech executives have countered in the NY Times article:

"I.T. is the vehicle by which you turn ideas and content into intellectual property products," Mr. Craig Barrett (of Intel) said. "As a nation and as a company, you either upgrade your I.T. infrastructure or you won't be competitive."

Samuel J. Palmisano, chief executive of I.B.M., made the case for his industry's growing at twice the rate of the economy when he spoke to analysts on Wednesday. "The industry is fundamentally a growth industry because it underpins productivity," he said.

Kevin Werbach speaks of new models in the Post-PC era in his Supernova report:

...The point of the article is not that tech is dying, or that innovation is drying up. It's that enterprise technology is moving into a new phase. Bigger, faster, and more feature-laden are no longer selling points in the same way. Smarter, simpler, more efficient, and more flexible are the new criteria. It's much harder to make powerful system simple than to make them complex....

Zack Lynch points how IT drives growth in other sectors:

For instance, although not a punctuated leap in competitive advantage, social software has the potential to accrue significant value for companies that leverage its potential to accelerate innovation. In some industries, two product cycles can be the difference between corporate life and death.
For example, decreasing innovation cycle times in the pharmaceutical industry by 10% could slash years off product research, development and approval processes. When translated into revenue and market capitalization impacts, intelligent adoption of social software could significantly disrupt the balance of power in this multi-billion dollar industry. Who says IT competitive advantage is dead?

What is unique about IT compared to other revolutions is how it extends the capabilities of people and groups. IT fuels competitive advantage by enhancing productivity. Erik Brynjolfsson of MIT has demonstrated that productivity gains occur not through IT in and of itself, but when it is introduced with new business practice and process.

This is actually a contrarian point for many. Some private equity investors shy away from technologies that require change of behavior, for example, because it adds risk that users will resist change. But in fact, that's the real promise of IT, to extend our capabilities in new ways. Changing behavior is good in a changing world.

Brynjofsson's studies have been in process-intensive areas of organization. Areas where economies of scale can be easily realized. When business process is defined, it is almost immeadiately outdated because environmental conditions change presenting new sets of information. This underscores the need for business practice that realizes economies of scope (agility), but also the limits of process itself.

What remains is knowledge work. Most jobs in the service sector spend the majority of their time undertaking unstructured tasks in social context. And this time is where innovation occurs (Palmisano points to IP creation, but that's just one set of montetizable outcomes).

IT will continue to drive competitive advantage for business because an incremental enhancement of how groups work still yields exponental benefits.

Wikis in Business

Mon, 19 May 2003 04:56:02 GMT

Socialtext is covered in a great New York Times Article by Amy Cortese on Wikis in Business.

...Software programmers have sought for decades to design products that help people collaborate in the virtual world as easily as they do in the real world. E-mail is by far the most successful result, but it is linear and best suited for back-and-forth communications involving two people or a small group. On the other end of the spectrum, groupware programs like the Lotus Notes software sold by I.B.M. are elaborate attempts to mimic work environments, with multiple levels of authorization, defined work flows and lots of rules — just like a corporation.

The most distinctive characteristic of a wiki is that anyone in the group (or for public wiki sites on the Internet, anyone who visits) can edit, modify or even delete material on the pages. Such a free-form collaborative process can be messy and chaotic, and it requires a commitment to the group that may not sit well with some egos. But over time, wiki advocates say, a group voice or consensus emerges into what some enthusiasts call "emergent intelligence."

The creative anarchy of the wiki is the philosophical inverse of conventional corporate groupware software. Groupware's highly structured rules and processes do not always reflect the way people really work. Employees often ignore costly corporate-sanctioned software and revert to informal social networks — whether simply e-mail or impromptu water-cooler discussions.

Ward Cunningham, who created the first wiki in 1995 and is the author of "The Wiki Way," a manifesto and how-to manual published by Addison-Wesley, says a wiki is a medium for connecting an electronic community and allows "idea keeping." A wiki presents its members with a blank slate, and their entries determine its structure and organization.

As with any community, each wiki develops its own social systems and rules to guide behavior. But there is basic wiki etiquette. For example, wiki-squatting (using a few pages of a wiki for your own personal use) and wiki spam (pushing a product or service on a wiki page) are frowned upon, and offending pages are likely to be deleted by group members. In addition, a good wiki citizen will always give credit and link to material that someone else has already contributed.

Given that wikis are easy to use, inexpensive and can be set up without a company's information technology department, it is no surprise that the software is making its way into business organizations through the back door — much as instant messaging and other stealth innovations have done. While wikis can be helpful for project managers and employees in charge of small teams, corporate managers who favor greater control are more likely to be wary.

That is why various entrepreneurs are beginning to tailor wiki software to corporate use. SocialText, a San Francisco start-up, for example, has wiki software with Web log and chat capabilities. It has also added security features and programmed the whole package to work with standard office and e-mail software.

The SocialText software, which starts at a price of $995 a year for five users, is being used in about 20 companies, typically small businesses or departments within larger ones, according to Ross Mayfield, SocialText's chief executive.

One SocialText customer is Composite Tech, a $10-million-a-year maker of bicycle tires sold under the Zipp brand. Since early April, Composite Tech, based in Indianapolis, has been using the SocialText wiki for a variety of tasks. Employees contribute informal notes on what the competition is doing, for example, while product development engineers keep track of production schedules as well as advances in materials and other innovations that they might use in future models. Notes from meetings are kept in a wiki, and sales and customer service employees can consult the pages to check on production status and plans.

Denham Grey, the production manager at Composite Tech, says the wiki has become a central repository for information that formerly was shared only in an ad hoc way through e-mail or face-to-face encounters. The wiki, he says, is making it possible to build an "informal corporate memory."

Another SocialText user is Global Business Network, a consulting company in Emoryville, Calif., that employs the software to create comprehensive records of client meetings. Chris Coldewey, a consulting associate at Global Business, says he likes the fact that the wiki can be used by anyone. "The bar to participating is very low," he said. "You don't have to have any skills other than typing."...

"You just have to do enough things well enough and cheaply enough," says Clay Shirky, a software guru who is an adjunct professor at New York University's Interactive Telecommunications Program. "It's the attack-from-below strategy."

Asymmetric Marketing

Fri, 02 May 2003 20:50:47 GMT

John Katsaros in the Internet Acceleration newsletter coins a term for the current state of enterprise marketing:

We’ve started our review of how the enterprise market segments are shaping up for the 2003/2004 horizon and one fact is coming through loud and clear – the days of horizontal marketing of high tech solutions across most industry segments are gone and in their place is something that we’re calling Asymmetric Marketing to describe marketing very deeply in a few segments and thinly in the remaining ones...

The warfare metaphore isn't ideal, but verticalization is a clear trend for most solutions. The market is also trending away from asymmetric information where the seller holds all the cards.

Fear & Greed

Thu, 01 May 2003 05:33:18 GMT

Technology products and services provide value to enterprises in five ways:

Create new revenue
Enhance existing revenue
Reduce operational expenditures
Reduce capital expenditures
Reduce risk

When times are good, buyers start at the top of the list. When they are bad they start at the bottom. Think of it as Maslow's hierarchy of value propositions, ebbing and flowing with the business cycle.

On the VentureBlog (a must read for entreprenuers), this cycle is cast as fear vs. greed:

Fear Vs. Greed....The biggest tech spending revolutions have always been driven by greed at the opportunities available and the new applications possible. The personal computer revolution, the internet explosion, cellular phone proliferation and the huge companies created by them were made possible by end-users who suddenly had new applications available to them. If you're starting a company or building a product, it's certainly ok to rely on a bit of fear to get early sales. But ask yourself -- when the customer looks at the product, what's going to make them greedy? What will they do with your application that will make them money and their lives easier? What companies and products will be built that rely on your products' success before they can succeed? You can get your foot in the door with fear, but to really win, you have to inspire greed. [VentureBlog]

Beyond the business cycle, Zack Lynch points out that revolutionary waves of technology development follow a Pain-Pleasure Principle:

...the Pain-Pleasure Principle shows that once an upsurge of technological advancements focused on solving problems associated with pain gains momentum, we can assume that pleasure extensions of these technologies, where major profits reside, are not far behind.

VentureBlog joined Tim Oren in calling a bottom to this cycle:

...Venture capital will never lead the economy out of a slump: it's just too small a factor in the U.S. economy to ever matter. But increased venture capital investing is absolutely a leading indicator of better times ahead.

Actually its a following indicator. Venture Capital lags the public markets by one year. The good news is we are holding relatively steady in the public markets:

But if VCs are reporting increased dealflow and company formation, that's a good sign. As a following indicator of increased investment its a good source (ask others to call the top of a cycle).

So new companies are being formed. Many shortsighted ones will go after the easiest current proposition, reducing risk, especially for regulatory compliance. Some with make good businesses.

But great businesses are born at the bottom of the cycle finding niches where people are buying products that create rather than purely protect value. Technology has always predominantly been a source of competitive advantage, not complacent equivalence. And at the bottom of the cycle, the big leaky pipes have been patched.

At the bottom of the cycle less companies are placing big bets on new markets. Innovation instead springs from small bets of overlapping self interest. In particular, those where users are also producers, driven by commons-based peer production:

Figure 8: Innovation skyrockets when Users and Producers overlap
(as during the Linux development process).
Source: George Dafermos, Management and Virtual Decentralized Networks [52]

Decentralized technologies are the prime markets for this kind of innovation, because at the center are standards to foster open growth at less risk. From these wellsprings of innovation great techologies of advantage emerge.

Keep It Simple, Stupid

Tue, 11 Mar 2003 16:28:14 GMT

John McDowall on the unnecessary complexity of groupware and knowledge management tools:

Effective Social Networks on Ross Mayfields blog brings up the point of the complexity of groupware tools - I would add to this the whole field of knowledge management as being guilty of the same sin. There is a self perpetuating myth that there needs to be a complex set of software to manage large amounts of unstructured information. The myth appears to be that this information is hugely valuable and needs sophisticated tools to ensure you can squeeze the last drop of value out of it. One of my professors taught his class a key rule in any engineering project - always do a rough estimate for any calculation/project to get an idea of the size before doing a detailed analysis. This serves several purposes - makes sure you understand the variables in the problem and makes sure you do not misplace any zeros in the detailed analysis. Doing the same in any groupware or knowledge management application is a similarly revealing exercise - take a representative sample of information and reduce it to the key facts - it quickly shows there is not much there and what is there does not benefit from complex tools. So what is all this unstructured data - mainly attempts to create the evidence to prove the few facts that we are all trying to reach agreement on. Perhaps we should be looking for tools to assemble evidence in favor of the few key truths that we all hope exist.

Besides the resulting cost of complex tools, there is an even larger problem -- people don't use them.

World of Ends

Fri, 07 Mar 2003 05:41:48 GMT

Dr. Weinberger and I decided to sum up a whole bunch of stuff in one big site: World of Ends: What the Internet Is and How to stop Mistaking It for Something Else. Dr. W. explains more here.[The Doc Searls Weblog]

The Nutshell

1. The Internet isn't complicated
2. The Internet isn't a thing. It's an agreement.
3. The Internet is stupid.
4. Adding value to the Internet lowers its value.
5. All the Internet's value grows on its edges.
6. Money moves to the suburbs.
7. The end of the world? Nah, the world of ends.
8. The Internet’s three virtues:
a. No one owns it
b. Everyone can use it
c. Anyone can improve it
9. If the Internet is so simple, why have so many been so boneheaded about it?
10. Some mistakes we can stop making already

It all begins with Simplicity, turns out bandwidth is a commodity, and let's be stupid and not screw it up.

Participants, not Consumers

Wed, 05 Mar 2003 15:21:27 GMT

Reclassifying the 'Consumer'. My friend Jerry Michalski, a notable thinker about how digital technology is changing the world, has long loathed the word "consumer" -- calling it grossly inaccurate and demeaning description of human beings in a market economy. I agree entirely.[Dan Gillmor's eJournal]

In a more connected economy, when I buy a product or service I become a participant in its network. I engage in conversations with the company that provides it. I am a positive or negative reference for the product to other potential buys. I become part of the informal network that supports it, particularly with complicated tech products. I self-bundle two complementary products and thereby bridge two networks. Participants play active roles -- not just in the consumption of a good, but the production of information that relates to it.

The more "out there" sugggestion is that this production follows Yochai Benkler's commons-based peer production model.

App Server Commoditization

Wed, 26 Feb 2003 15:54:19 GMT

Sun's project Orion will provide an Application Server for free with Solaris. A move that repositions Sun and BEA in conflict.

BEA, the market leader, has already faced similar pricing pressure from IBM. J2EE App Servers are a commodity. Now its a battle of the bundle, with Sun seeking to sell hardware, BEA development frameworks and IBM integration services and datacommodities.

Two Fisted Trouble

Fri, 27 Dec 2002 20:53:36 GMT

Chris Locke demonstrates that he remains king of monkey business, to which I concede. But let me clarify my point on Gonzo Marketing for Chris and David Scott Williams.

If everyone goes Gonzo everyone goes home. Vendors will scale people using both technology and real people. Customers will be saturated with these real people taking their time for conversations to fulfill their referral program quotas. Said customers will have little recourse aside from isolationism.

Of course this is a good problem compared to how spam scales and other marketing approaches. And the point in marketing to be different as well as effective. Gonzo is perhaps the most real part of the mix -- that happens to be extremely different than current mass convention. So go Gonzo before everyone else does.

Good Experience

Fri, 27 Dec 2002 18:59:26 GMT

I am thinking of attending the first Gel Conference on creating positive experiences for customers. Its not until May 2nd 2003, so don't expect any design improvements to this blog until then. Also, organizer Mark Hurst's blog will give you a taste of it [disclosure: a good friend of mine used to work with Mark]. Let me know if you sign up for it.

The purpose of Gel is to explore what it means to create a good, meaningful, or authentic experience.

Gel is the only conference of its kind, focusing on experience itself, rather on taxonomies or frameworks that only indirectly relate to experience. We all know a good experience when we see it; at Gel you'll hear the user's perspective, since (designers or not) we're all on the receiving end of experience most of the time.

Conversations

Sat, 21 Dec 2002 19:08:52 GMT

There was madness in any direction, at any hour. If not across the Bay, then up the Golden Gate or down 101 to Los Altos or La Honda... You could strike sparks anywhere. There was a fantastic universal sense that whatever we were doing was right, that we were winning....
And that, I think, was the handle --- that sense of inevitable victory over the forces of Old and Evil. Not in any mean or military sense; we didn't need that. Our energy would simply prevail. There was no point in fighting --- on our side or theirs. We had all the momentum; we were riding the crest of a high and beautiful wave... -- Hunter S. Thompson

When I first read the Cluetrain Manifesto, I was specifically drawn to the main point of the book: "Markets are conversations." Reason being at the time I was co-founding a B2B exchange for telecom, developing a market. When the company was a small unfunded startup we had a site that automated little more than posting an offer to buy or sell. The rest was pure phone grease. Picking up the phone and mediating discussions between buyers and sellers to find common ground.

When the B2B boom hit (Doc recently said rightly it should have been BwB, as people dont want business to be done to them, but with them), we got a little away from the converation piece to create automated value. But then we began working with the energy industry to develop a commodity market. When most people think of commodity markets they think of automated straight-through-processed transactions. But the reality is these markets are even more conversational than transactional. They rely on phone brokers and traders to hold conversations about where the market is, where its going, and the relationships that unfold.

Now I find myself in the role of a marketing consultant and an entreprenuer in areas where I am participating in, not designing, markets. Along comes another clueful book to keep my philosophies in check, Chris Locke's Gonzo Marketing. This time its about enaging in conversations with customers.

Chris writes in just about the most dense rich evocative prose possible. I come away feeling I have been brainwashed with brilliance and compelled to return and refer, make that re-read. The thrust of the book cannot be summed up in a nutshell, but it purports Gonzo Marketing as the next, and more human, in a line of marketing theories. Gonzo Marketing suggests e-commerce is a set of micromarkets, each potentially with its own community and if large companies can put aside their fears and practices they have a unique opportunity to engage customers in honest and fruitful conversations. But rather than try to outline it here, let me get to the point of this post.

All theories of marketing eventually outdate themselves in use. Mass or Niche or Relationship or Cause or other marketing theories become ineffective because customers wise up. Marketing is about making buying something compelling and reasonable. Most techniques validate a product through something different than the product itself: ads and placements that provide identity, custom tailoring messages to profiles, third party institutions providing validation, association with other causes, etc. In other words, associating the product with something customers trust or aspire to.

What Gonzo offers is different, no false associations. Just enable real conversations between you and the customer and between customers. Let the social network provide the validation. But here's the rub: I fear the world in which too many people read this book.

All mediums and modes of communication become saturated and outdated as well. Advertising in abundance becomes ineffective. Spam destroys the utility of modes of communication. And people only have so much time. If too many people read this book and employ Gonzo strategies, then you are going to have alot of people trying to have conversations with you. The noise in the room will increase, people will be shouting and our ears will hurt.

On the Net, besides having choice in what you, um, consume and who you communicate, people also increasingly create. This all takes time. Look at Bob Frankston's essay today on the challenges of writing and communicating today (I have been taking away much of Bob's email time this week, and we just met, so its partly my fault).

I have no doubt that big business will find a way to clone Chris before too many people read his book. There are alot of liberal arts majors out of work these days. And people always value what they create more than those that consume it. But the other side of the conversation won't have clones for some time now.

Waves and Things

Mon, 09 Dec 2002 00:12:56 GMT

Mitch Ratcliffe puts the Next Big Thing list in perspective...

While I can appreciate the focus that a "big thing" lends to folks with a business degree, the broader and more flexible approach to decisions about resources afforded by a historical perspective tell me that it is the Next Long Move, a trend that pulls people and organizations along new paths, that provides the richest opportunities. Trends are based on collections of things, not any one thing... A focal point-like "big thing" makes you subtract everything from the picture that doesn't fit. [RatcliffeBlog]

Schumpeter's Business Cycles (1939) proposed a three-cycle model of economic fluctuations or waves. Squeezing a fourth cycle between his second and third, we get...

Kitchin inventory cycle (3-5 years)
Juglar investment cycle (7-11 years)
Kuznets infrastructural investment cycle (15-25 years)
Kondratieff long cycle (45-60 years)

For Schumpeter, three Kitchins make up one Juglar and six Juglars make up one Kondratieff. Fitting in the Kuznets, we presumably have two or three Juglars to one Kuznets and three Kuznets to one Kondratieff.

Right now we are at the beginning of the next Juglar investment cycle. I believe what Mitch calls a Long Move is a Kuznet wave, a major adoption of new infrastructure that impacts all facets of humanity. We are in the middle of a Kondratieff wave, that of IT.

The next Kondratieff wave is what Zack Lynch is blogging about, the Neurotechnology wave. Zack speaks in waves, so if you want to learn more about the concept and history of waves, follow his posts.

I agree with Mitch that Things are not enough to base an cash or time investment decision upon, larger trends, or waves, need to be taken into account. However, I like lists of Things to be sure Im not missing any I need to invest time to understand. And when you find something that interests and makes sense for you, understand the wider context -- and go for the Juglar Jugular.

The Gravity of Decentralization

Fri, 06 Dec 2002 18:57:25 GMT

Designing business architectures (models & systems) is an increasing challenge. Centralized business architectures are a legacy of the industrial era. But the recent downturn has revealed new decentralized systems that promise to enable new business models and evolve the old. We are just beginning to explore the practice of decentralization and the new gravity it creates.

This post explores key benefits of cost and risk reduction:

Capital Expense: Smart Build vs. Dumb Build
Operating Expense: Centralized Complexity vs. Decentralized Service
Market Risk: Centralized Liquidity vs. Decentralized Standardization
Operational Risk: Centralized Security vs. Decentralized Defense

Identifying these benefits should help understanding how to achieve balance between centralized and decentralized gravitational forces.

Capital Expense: Smart build vs. dumb build

Centralized infrastructures (bandwidth, storage & processing) require significant up-front capital investment, justified by "smart build." They rely on "smart" forecasting of capacity requirements to determine what to build in advance of immediate delivery (spot markets). But in absence of forward markets (like futures, only over the counter) to lock in future prices and quantities, and only rudimentary vehicles to pre-sell capacity -- determining requisite supply is done without market data. In addition, IP traffic, which drives investment in capacity to support it, is notoriously bursty and diverse. Sheer complexity and absence of market data make forecasting and planning an art rather than science.

Also, centralized infrastructures rely heavily on economies of scale in both system economics and business models. The upgrade path isn't granular, at best its at the line card level for routers and servers. In the economics of bandwidth builds rights of way and spectrum licenses are the largest costs. This cost is also the largest speculation of future capacity, both in the lag time until monetized and the volume of capacity it represents. Spectrum speculation also relies on the pricing of an intangible asset, driven by market participants compelled to bid to maintain competitive in a market they already sunk significant costs in. Spectrum speculation recently resulted in $150 billion of spend – before the investment of another $150 billion in tangible asset infrastructure; larger than the addressable market.

The second largest cost, digging the trench are the largest costs, compels telecoms to lay as many fiber strands in the trench as they can. Remaining dark. Supply and demand cannot be balanced, and excess capacity inventory is a service requirement. The result is continual glut or failure to meet customer demands. This is fine when capital markets appreciate excess capacity inventory, but otherwise its punishing model.

Dumb builds of decentralized infrastructure do not rely on central planning/forecasting. Capital risks and burdens are pushed to the customer: forecasting individual requirements, upgrade/migration paths and up-front investment. Intangible assets that only serve the purpose of creating barriers to entry for competitors, such as spectrum speculation, can be avoided costs through models such as Open Spectrum.

In addition, decentralized infrastructures can be more granular. Manufacturing of equipment for these infrastructures remains centralized, but there is less risk in the model. Forecasting a diverse network's requirements is several orders of magnitude greater in complexity than forecasting customer units. Manufacturing systems are also built to take advantage of economies of scale, scope and speed. Capital markets understand the mature model of manufacturing capacity & inventory to more adequately assess inherent risks.

Operating Expense: Centralized Complexity vs. Decentralized Self-Service

Centralized business architectures cannot scale when it comes to providing service. Centrally planned automation of functions and processes become rapidly obsolete in a turbulent environment. Inevitably to maintain service, people are thrown at the problem. And people don’t scale. Large centralized IT administration, network administration, customer support centers result in large Sales, General & Administration costs (e.g. 25% of revenues in the telecom industry). What’s worse, service is significantly impersonal and these jobs strain the limits of satisfaction, creating a dysfunctional cycle of quality degradation.

Decentralized business architectures empower customers to serve themselves and provide communities of support. Obviously this results in less cost and enables scale. But the power of self-service, whether for purchasing, provisioning or support cannot be overstated. Provided self-service is simple, providing otherwise internal information to the customer as well as control instills trust and satisfaction.

Market Risk: Centralized Liquidity vs. Decentralized Standardization

As we learned in developing the first B2B marketplaces, liquid emerging markets take time to develop. Marketplaces and market makers must bear significant risks to establish a market. Despite the benefits by design, providing centralized alternatives to the entropy of existing relationships is an inorganic development. Before centralized markets take hold, competing standard alternatives arise in decentralized fashion. Over the counter markets of buyers and sellers with existing relationships transact directly at first.

The role of decentralization in market development is the creation of standards for transactions as a bridge to centralized mature marketplaces. Creating standardized definitions of price, quantity, quality and contracts for goods accelerates over the counter liquidity and creates pockets of price transparency. As the market unfolds, conversations drive convergence of standards and invites participants organically.

Physical liquidity grows and demands risk management in the form of forward and futures markets. These markets demand centralization for both price transparency and liquidity to prevent manipulation The point of describing how market emerge in decentralized form and then transition to centralization – but this process is important to understand in the tech industry as it transitions to datacommodity industry through the adoption of utility models.

Operational Risk: Centralized Security vs. Decentralized Defense

Similar to the challenge of scaling service is scaling security. The diversity of threats and complexity of managing them makes large scale centralized security untenable. Like fighting the adaptive threats of Spam through designing new filters, centrally designed security solutions fail to keep up with environmental changes. Further, security requires expertise and there is a limited pool of human capital to provide it. As companies scale their openness to the environment to take advantage of Internet infrastructure, so to scale the demands to secure. The problem is if the costs to insure security run in parallel and even past the value of what they protect, innovation and infrastructure will be hampered by the security overhead.

Countering the trend of security overhead are emerging autonomic security solutions, for example those of Sana Security. Inspired by the design of the immunity systems in our own bodies, they provide a complex adaptive system that adapts to dynamic threats.

While security systems designers scramble to meet this escalating challenge, many would do well to reassess their fundamental design approach. The unfortunate fact is that the prevailing method of security systems design contains at least one fatal flaw: It assumes that system designers can adequately anticipate and create appropriate responses for every type of security breach possible within the system.

From an article by founder Steven Hofmeyr…

It's only human to think that we've anticipated all of the ways the systems we design can be compromised. After all, if we designed the system, then we must know it inside and out, right? The truth is that that vast majority of engineers and analysts cannot possibly predict the wide variety of viruses, worms and hacker attacks that could cripple their systems in the space of a few minutes…

To counter hackers' ability to stay one jump ahead of system designers, security managers are beginning to move beyond firewalls and IDSs [intrusion detection systems] to incorporate a set of technologies known as adaptive detection and response (ADR) systems. These systems deploy highly sophisticated monitoring agents to track operations at targeted file and operating system levels (similar to the way that the human body monitors its own layers of systems). Unlike IDSs, which look for known system and network threats, ADRs first build a complete profile of normal system operations, then continually monitor for any change in the underlying patterns of the system or network.

Now decentralized architectures cannot be applied everywhere, but the decentralized autonomic approach to security certainly has a prominent role in reducing risk and enabling scale.

Balancing Business Architectures

As the tech industry undertakes its fundamental shift to utility service, the gravity of decentralization is breaking down centralized industrial era structures. The Frontiers of System Economics are being explored. System architectures previously focused on economies of scale and speed increasingly shifts to realize scope and span. Business models undertake a similar shift.

The cost reduction benefits of decentralized architectures, as pointed out by Kevin Werbach are too prominent bottom-line benefits to be ignored. So too are the benefits of risk reduction. The challenge in truly understanding the right balance between centralized and decentralized business architectures is that we are just beginning to explore the top-line benefits of decentralization. The top-line benefits of centralized forms of scalable enhancement of existing revenue and generating new lines of revenue are well known. But the top-line benefits of decentralization will have to be the topic of a future post.

Supernova

Fri, 29 Nov 2002 15:19:27 GMT

I am attending Supernova, the most interesting conference I have seen in years, put on by Kevin Werbach & Jeff Pulver.

Unified by the theme of Decentralization, its on most of the technologies and business models that have made me an optimist again -- weblogs, web services, collaboration, P2P, grid computing & WiFi. I look forward to seeing old friends and new ones, let me know if you are going.

And the line up can't be beat:

Jeremy Allaire, CTO, Macromedia
Marc Benioff, CEO Salesforce.com
Sergey Brin, Co-Founder, Google
Andy Chapman, EVP, Narad Networks
Nick Denton, CEO, Weblog Media
Cory Doctorow, Evangelist, EFF
Ann Thomas Manes, Author and Former CTO, Systinet
John Hagel III, Consultant and Author
Dan Gillmor, Columnist, San Jose Mercury News
David Hagan, President, Boingo Wireless
Duncan Davidson, CEO, SkyPilot
Morgan Guenther, President, Tivo
Mike Helfrich, VP of Applied Technology, Groove Networks
Meg Hourihan, co-author, We Blog: Publishing Online with Weblogs
David Isenberg, Principal Prosultant, Isen.com
Karl Jacob, CEO, CloudMark
Dan'l Lewin, Corporate VP, Microsoft
Mike McCue, Chairman, TellMe
John Parkinson, CTO, Cap Gemini Ernst & Young
Yatish Pathak, Founder, SOMA Networks
Howard Rheingold, Author, Smart Mobs
Bill Robins, CEO, Stencil Group
Martin Rofheart, CEO, Xtreme Spectrum
Sean Ryan, CEO, Listen.com
Doc Searls, Linux Journal
Clay Shirky, Shirky.com
Dave Sifry, Co-Founder, Sputnik
Narry Singh, VP of Marketing, CommerceOne
Rod Smith, VP of Advanced Technology, IBM
Dave Winer, CEO, Userland

I am blogging the conference, but don't expect to be the only one.

Marketing Cycles

Wed, 13 Nov 2002 20:22:44 GMT

One of the interesting things about living through an extreme business cycle is extreme changes are more noticable. The marketing function itself, shifts wildly in its activties as I commented on with a focus on ROI. But there are larger shifts at play as well.

Organizational Structure

The boom period was marked by two organizational trends for marketing: centralization of some functions and customer-focused organization. Advertising, New Product Development, Market Research, Sponsorship and Events and Major Promotions were centralized to realize economies of scale. Merchandising, Local Promotions and Channel Management remained decentralized, falling under the Business Unit VP of Marketing. For more on these trend see a Marketing Leadership Council survey.
But the bust that followed the boom has led to increased spending in decentralized activities, as the value of existing customer relationships is at a premium and these methods are more effective. Centralized organizational structures will likely remain, but their primary role is in financial controls. The payments, and to some degree the bits -- leaving the atoms to be managed in the periphery [Using Mohan Sawhney's language]. Now budgets are power, power is politics and organizational structure is highly influenced by politics -- so don't be suprised to see a decentralization trend.

Inbound/Outbound

During the boom, a premium was placed on the ability to communicate to generate new customers, or outbound marketing. This was driven by the percieved value of market share (a common belief that there was more than 100% of the market to be had), lifetime new customer valuation (a common belief irrespective of churn), and the low cost of capital for use in promotion to achieve share.
During the bust, despite the decline in advertising prices, the ROI of promotion declines relative to product, place and price -- the domain of inbound marketing. There are exceptions, specifically direct marketing activities continue to achieve relative ROI. But the relative cost of the Inbound function (people making smart decisions based on investments to get good data) and return from optimizing the product line outperforms when you have to get more out of what you have got. The good news is technology companies are beginning to invest in R&D again, which will drive the creation of product management and product marketing jobs. The cycle continues to benefit MarCom.

Influencers/Influencing

During the boom, customers have more to spend and are more receptive to how companies define their product. Investment in advertising, events and major promotion to directly influence customers makes sense.
During the bust, the wallet thins and transactions scrutinized. The particularly excessive vendor claims during the boom now have customers doubting the competitive advantage of technology. Customers believe in themselves first, 3rd parties second and vendors last. Today vendors must focus on 3rd parties, influencing the influencers -- through PR, customer references (Don't get Siebeled!), word of mouth.

New Marketing Fix

Wed, 13 Nov 2002 18:08:40 GMT

Rick Bruner, John Engler, Steve Hall, Robert Loch and Oliver Travers, have launched Marketing Fix -- a collaborative weblog on e-Marketing news. Seems to be B2C and Ad oriented. It fills a much-needed niche and is now one of my daily reads.

Robert and Oliver also collaborate on End of the Free (a must read). The majority of them are also at blog-tribe.ryze.com.

WiFi Workplace ROI

Tue, 12 Nov 2002 17:13:47 GMT

This article in Fortune magazine highlights WiFi installations at Novell and talks about the value of WiFi at work [original pointer from: Windley's Enterprise Computing Weblog].

"Today, you don't sell technology--you sell ROI," says Paul Fulton, former general manager of 3Com's wireless-LAN business and now executive-in-residence at venture capital firm Mayfield [no relation to Ross]. "You have to say this is going to raise revenue or lower cost."

Here are the ROI highlights from the article:

Hard Cost Substitute Benefits -- ...a wireless LAN deployment for a new office of between 50 and 100 people costs $20,000, vs. $250,000 to get a wired LAN up and running. What's more, he says, "you never know when you're going to move an office, so all the cabling you put in could be wasted."

Increased Productivity -- Employees spend an average of 3 hours a day in meetings, and some users claim increased meeting productivity. An Intel study of its own 800-person deployment found that WLANs deliver 23 minutes of additional productivity per day. Most employees interviewed for this story said that Wi-Fi "saved" them between a half-hour and 90 minutes per day.

Decreased IT Administration Costs -- Mostly through elimination of LAN administration tasks.

Employee Satisfaction -- In a Cisco-commissioned study of more than 300 organizations, 87% of WLAN users said their overall quality of life had improved. Improving employee satisfaction is the cornerstone of the service-profit chain: employee satisfaction --> quality & service --> customer satisfaction --> loyalty & profit.

New Potential Costs -- "We have parallel conversations running at my meetings, and I'm hoping that they are finding solutions, but they are probably complaining about how unreasonable I am," quips Intel CIO Doug Busch. "When there are laptops everywhere, culturally it can create a whole lot of problems," says Novell CIO Debra Anderson. "We're finding the balance between Wi-Fi as an intrusion and as a powerful, productive tool."

Intangibles -- The article doesn't touch on this too much except to highlight the concept of convenience. An opportunity exists to measure benefits according to opportunity costs.